Starting a startup

Placeholder for something bigger if I decide in the future. For now, here is a note I wrote to myself many years ago which seemed worth saving.

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From file /Dropbox/Notes/Travis.md

20160726 @ Inn at the Forks Hotel in Winnipeg Canada

I need to create a speech for the entrepreneurs and government people later today. The topic is - starting a company inside/outside of Silicon Valley. I have done both.

I think I want to cover the major places that I have failed in previous attempts at starting a business. I’ve woken up the last two mornings thinking about this:

Critical elements of getting a company funded:

1. Team
2. Technology
3. Traction
4. Timing

All these things blend together, so they can’t be talked about in isolation, but I’ll do my best to group them »

Thoughts on Team: It’s really hard to do a startup on your own. There is too much to do. There is too much to be very good at. There are too many decisions to be made. It is hard and you need somebody to lean on.

If you’re going to try and get funding, the Number One thing the Angel/VC will consider is if your market is big enough to support a huge company (which I’ll get to later), and second, whether this is the team to make it happen.

Who to choose: * Somebody who makes you feel the need to bring your A-game every day * Somebody who complements your skill set. A technologist is almost required for any company with a tech component, don’t try and outsource your core competency. If you have a techie on board, or if you are a techie (even better), then get a designer * Somebody who is in the same position as you are. Somebody who is absolutely committed to the end to this company. * Somebody who agrees to vest into their shares just like you. Nobody, not even you, gets ownership of the company until they’ve proven they deserve it.

Thoughts on Technology: You need to have an advantage over the other solutions in the marketplace. In today’s world this is usually provided by technology.

A lot of entrepreneurs that we see in Silicon Valley are doing one of two things: Yesterday’s Tech (Apps, social, dating) or Tomorrow’s Tech (Biotech, Space, Clean energy, AR/VR). In general, if you’re using yesterday’s tech you need massive traction to get money. If you’re using tomorrow’s tech, you need massive credibility to get funding.

Thoughts on traction: The next Google will not be a search engine. The next Facebook will not be a social network. Every new company looks different than the last one. If you’re creating a “better widget”, you will fail.

A “Facebook for dogs” will never be as big as Facebook. An “Airbnb for XYZ” will never be as big as Airbnb. If you want funding, and if you want to create something important and valuable, don’t be a direct derivative idea. It’s better to combine two different markets. It’s better to use new technology in an innovative way.

Thoughts on funding: Know the difference between the type of business that is venture fundable and one that is not. Most companies are not right for venture capital. Usually you can tell the difference simply by asking if your company can be worth $1B. I.e., in your dreams, do you see a way, and can you explain it clearly, how your company could be (a) doing several hundred million dollars of revenue per year or (b) several hundred million monthly users, and still growing fast? If yes, you have a VC fundable company. If no, don’t even start down the road because it will end in nothing but heartache and pain.

The path of a VC funded company (it’s like the mob, once you’re in, you’ll never get out): * team/traction/growth/funding * hire/growth/funding * competition/expand/market timing/funding * liquidity